CHICAGO–Alliant Credit Union has announced it is eliminating its overdraft and non-sufficient funds (NSF) fees.
“We think this is the right thing to do by our members,” Alliant CEO Dennis Devine said in an interview with CNN. “And this puts pressure on the rest of the market to do the right thing.”
The $14-billion Alliant, which began its life in 1935 as the credit union for United Airlines employees, has more than 600,000 members.
Alliant painted the move as a way to differentiate itself from traditional lenders and to grow its base of more than 600,000 customers.
Devine told CNN that the elimination of overdraft fees will "of course" hurt Alliant's revenue.
"Any decision to take a fee to zero will have an impact on revenue," he said. "But we have not relied upon fees like some other financial institutions have historically."
Alliant Credit Union is among the CUs that have in the past been targeted by lawsuits over its overdraft practices.
Congressional Scrutiny
Pricing for overdrafts and bounced-check fees have been under scrutiny nationally, with Democratic members of Congress looking to crack down on the practice.
As CUToday.info reported, House Oversight Committee Chairwoman Carolyn Maloney (D-NY) recently reintroduced legislation that would make it illegal for banks to charge more than one fee per month. That bill, similar to ones Maloney has introduced in prior years, would also require that these fees be proportional to the amount of the overdraft and the actual cost to the financial institution
Approximately 5% of checking account-holders overdraft more than 20 times per year, according to Pew Charitable Trusts’ research cited by CNN. At $35 per overdraft, that’s more than $700 annually in such fees for people who are typically living paycheck to paycheck, the report added.
‘Helps Us in the Long Run’
Alliant’s Devine told CNN the decision was not easy and there was some internal dissent over making the decision.
“We're now in a posture that most institutions are not. That is going to create discussion," Devine said. "But it helps us in the long run."
As CUToday.info reported, UWCU in Madison, Wis. recently reduced its overdraft fee to $5. Ally Bank also announced it has eliminated its overdraft fees.